KIT digital acquires Sezmi assets

KIT digital, a cloud-based software solutions and technology services provider for multi-screen video delivery, has confirmed that it has acquired certain assets and liabilities of Sezmi Corporation, the provider of broadband-broadcast hybrid TV solutions based in Belmont, California.

Sezmi pulled the plug on its consumer operation September 23. Sezmi’s subscription video service was available in 36 metropolitan areas of the United States. It provided a DVR which recorded free over-the-air broadcasts, plus OTT video from Internet sources. Instead, Sezmi said it was changing its business focus to providing its product and technology platform to service providers, internationally and in the US.

KIT digital paid consideration of approximately $27 million in a mixture of stock and cash, plus earn-outs. The transaction is expected to be immediately accretive on a revenue, cash flow, and cash earnings basis. The closure of the acquisition at year-end allowed for certain tax and accounting consolidation advantages without impacting Q4 2011 operating results.

Sezmi was an early innovator developing platform software for IP video management. As part of the transaction, KIT digital acquired 18 patents from Sezmi related to over-the-top (OTT) platform provision in the mobile, online and digital terrestrial television (DTT) environments that it believes enhances its leadership position in the IP video platform industry.

“Sezmi has been an early mover and one of the few direct competitors providing integrated, multi-device platforms for OTT premium content offerings – with unique capabilities in hybrid 4G/LTE and DTT deployments,” commented Gavin Campion, president of KIT digital. “Our companies share a commitment to serving the most complex client needs in our industry, and we are excited to kick off 2012 with the addition of their major clients, valuable technology and patents, and world class personnel.”

“Sezmi also adds key clients in markets that we have previously highlighted as our highest priorities, specifically Asia-Pacific and Latin America, where we see significant green-field growth opportunities,” continued Campion. “The future of our industry lies in the combination of LTE and broadband, and Sezmi adds leading edge publishing capabilities in these areas that are essential to integrated OTT offerings everywhere in the world. This will allow KIT digital to drive growth in developing markets with low terrestrial broadband penetration.” he declared.

KIT management estimates that contracted and visible pipeline business from Sezmi will generate revenues of at least $20 million in 2012, with a cash earnings contribution of approximately $4 million — representing approximately $0.08 of incremental pro forma cash earnings per share (EPS) in 2012.

Phil Wiser, co-founder and CTO of Sezmi Corporation, suggested that the industry’s evolution favoured global scale, R&D and deployment experience, and that Sezmi’s customers, employees, technology partners and other stakeholders would all benefit from being part of and served by the industry leader.